Why mortgage rates are going up despite the Fed's interest rate cut
Published On Oct 21, 2024, 1:52 PM
Mortgage rates are unexpectedly rising, even as the Federal Reserve has cut the federal funds rate for the first time in four years. After showing signs of potential improvement, with rates dropping to 6.2%, they surged to 6.44% recently. This increase is attributed to a stronger economic outlook, rising inflation rates, and higher-than-expected employment data. Analysts suggest that mortgage rates typically rise in response to long-term interest rates influenced by inflation and economic growth expectations, rather than immediate Fed decisions. Although current rates have returned to mid-August levels, they are still notably lower compared to earlier this year.
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Given the current trend of increasing mortgage rates influenced by macroeconomic factors, including rising inflation and a more robust economic outlook, it seems the upward trajectory may continue in the short term despite the Fed's efforts. Investors may consider monitoring the housing market and related sectors accordingly.
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